The concept of factoring in the Maltese context : the FIMBank experience

Abstract

Growing firms frequently experience liquidity problems. The factoring of invoices represents easy and rapid access to the required cash. However, the service risks being mis-sold as simply another financing facility, since the administrative and credit control services are often not emphasized sufficiently. When factoring was introduced in Malta in 2006, it was almost entirely unheard of as a financial tool. Nonetheless, the marketing of factoring has increased substantially in the past few years. The principal aim of this research is to increase the level of awareness of the concept of factoring, in light of its provision by FIMBank plc in the Maltese context. This dissertation seeks to explain the different types of factoring arrangements supplied locally, as well as to examine the advantages and drawbacks of this form of financing. The researcher sought to achieve the objectives of this study by making use of a quantitative research methodology. A semi-structured interview was conducted with Mr. Darren Sammut, senior supervisor at FIMBank plc. Since his opinions represent those of António Salgueiro, head Mediterranean factoring at FIMBank plc, they were highly regarded and deemed sufficient for the purposes of this dissertation. Literature determined that business people and financial institutions stand to benefit from a more in-depth awareness of the factoring service. Moreover, the research findings established that due to its regulatory framework and geographical position, Malta might be an attractive jurisdiction to be used as a hub for the provision of factoring services. These are few of the aspects relating to the factoring facility that will be tackled throughout this dissertation.